Arena Pharmaceuticals - All posts tagged Arena Pharmaceuticals

The biotech companywas under more pressure Monday after announcing on Friday that a European regulatory committee is unlikely to recommend approval of its weight-loss drug Qsymia (known as Qsiva in the U.S.) for sale in Europe. Shares plunged 9.7% to $18.90.

More negative commentary from analysts may have weighed on the stock today. The drug was expected to draw about 30% of peak sales from Europe, estimated Jefferies analyst Thomas Wel.

“Following the announcement that a negative recommendation will result in the company resubmitting the MAA at a later date or appeal such a decision, we remove European sales until further clarity is provided. As a result, we are lowering our price target from $16 to $13,” Wel wrote.

Competitor Arena Pharmaceuticals (ARNA), meanwhile, shouldn’t have trouble getting its weight-loss drug Belviq approved by European regulators, although approval isn’t a “slam-dunk,” wrote Credit Suisse analyst Lee Kalowski. ARNA shares were also down 6.8% on Monday after rising on Friday. Orexigen (OREX), which is also working on a weight-loss drug, was down 1.7%.

A day after the FDA approved Belviq, a new weight loss drug made by Arena Pharmaceuticals (ARNA), the Street seemed less sanguine about the company’s prospects. Shares had jumped 29% on Monday, but they gave back 10% on Thursday, closing at $10.23.

Analysts noted that weight-loss drugs have had a mixed history at best (anyone remember fen-phen?).

“While approval of Belviq represents a major accomplishment for Arena, we believe modest efficacy in Phase 3 trials may limit commercial potential,” wrote Needham analyst Alan Carr. “In our opinion, current about $2.1 billion EV is appropriate and we maintain our Hold rating. The obese population is large, but given a poor track record for drugs in the space, it is a challenge to gauge penetration rates for new drugs.”

Other analysts also expressed some caution going forward.

“Belviq approval is a big win, but is likely fairly valued in the stock at current levels,” wrote JMP Securities analyst Jason Butler, who thinks a fair value for the stock based on Belviq sales expectations is $10.

Arena Pharmaceuticals (ARNA) soared more than 20% on Wednesday after the FDA approved its weight-loss drug Belviq. It’s the first drug approved to target obesity in more than a decade. The drug affects a person’s brain, potentially making the person “eat less and feel full after eating smaller amounts of food,” the FDA said.

The news is a boon for Arena, as pharmaceutical companies race to develop drugs to help combat the obesity problem in America.

Still, investors don’t expect the pill to suddenly cure obesity — if they did, Weight Watchers (WTW) shares wouldn’t be trading just 1.7% lower this afternoon. And Arena investors don’t seem sure about how to value the new opportunity — shares initially popped more than 30% but are now up closer to 25%.

Arena’s drug is not approved for all obese overweight people.

“The drug is approved for use in adults with a body mass index (BMI) of 30 or greater (obese), or adults with a BMI of 27 or greater (overweight) and who have at least one weight-related condition such as high blood pressure (hypertension), type 2 diabetes, or high cholesterol (dyslipidemia),” the FDA said.

The FDA had denied approval for the drug in 2010 after some animals developed tumors, the AP reported, but the FDA determined that there wasn’t a significant tumor risk in humans.

At least two other companies are working on bringing weight-loss drug to the market — Vivus (VVUS) and Orexigen (OREX).

Both company’s shares rose after the Arena announcement. VVUS was up 6.1% and OREX rose 12%.

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